Difference of cash deposits in bank and turnover declared in VAT return added u/s 69A

Difference in cash deposits in bank and turnover declared in VAT return treated as income u/s 69A. High Court upheld the addition

ABCAUS Case Law Citation:
ABCAUS 2617 (2018) (11) HC

The appellant had filed the instant appeal with the Hon’ble High Court against the order passed by Income Tax Appellate Tribunal (the Tribunal) dismissing the appeal of assessee on the issue of additions made by the Assessing Officer (AO) under Section 69A of the Income Tax Act, 1961 (the Act).

The assessee was a proprietor. The assessee in the income tax return had declared that his case is “No Account Case”, and showed gross receipts of Rs. 9 lakhs and net profit of Rs. 1.20 lakhs.

The department had information by Annual Information Return (AIR) that the assessee had made cash deposits in his saving account.

The case was selected for scrutiny. Notice under Section 143(2) of the Act was issued followed by the detailed questionaire.

During the assessment proceedings, the assessee contended that his sales were of Rs. 29 lakhs whereas it was inadvertently declared as Rs. 9 lakhs in the return. It was contended that the assessee was not maintaining any books of account.

The Assessing Officer (AO) asked for details of purchases and sales and the copy of VAT return, but these were not produced on the pretext that VAT returns were not available and the purchase files were missing.

The AO obtained the copy of VAT return from Sales Tax Office. From the return, it was seen that the assessee had shown sales of only Rs. 9 lakhs in the VAT return and the assessee had also filed a Trading and Profit & Loss account in the balance sheet with the VAT return.

On being confronted with the documents received from the Sales Tax Department, the assessee furnished a cash flow chart. However, the entries made in the cash flow charts were not substantiated by any evidence.

In order to explain the cash deposits made, the assessee explained the source as withdrawal of cash from accounts, advances received from the parties and unsecured loans.

The explanation was not accepted by the AO as there were number of discrepancies in the cash flow. Since, no evidence was produced in support of the claim of withdrawal from accounts and advances from the parties, the AO rejected the same.

Accordingly, the AO mad the addition u/s 69A for the difference between the amount of turnover declared and the cash deposits in the bank.

Both, the CIT(A) and the Tribunal dismissed the appeal of the assessee.

Before the Hon’ble High Court, the assessee argued that the Tribunal erred in upholding the addition. He submitted that the assessee was able to explain the source of cash deposits. It was contended that AO erred in not appreciating the figures of purchases as per the VAT return and the value of closing stock.

The contention raised was that the authorities had not considered the figure of purchase and closing stock as per the VAT return.

The Hon’ble High Court noted that the details of the purchases and copy of VAT return were withheld by the assessee on the excuse that same were not available. The AO got the copy of the VAT return from the Sales Tax Office which disapproved the  submission that sales were wrongly declared. Also, before the AO the stand taken was that the appellant was not maintaining books of account, on the other hand with the VAT return, the appellant had filed Trading and Profit & Loss Account and the balance sheet.

The Hon’ble High Court thus observed that the appellant assessee had withheld the material information available with him.

The Hon’ble High Court opined that all the three authorities below had recorded consistent findings of facts. The appellant had not been able to dispute the findings of facts much less to prove perversity.

The appeal was dismissed

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